HANOI, Dec 24 (Reuters) – Vietnam’s economy is estimated to expand 8.44 percent this year but its inflation would be above the growth rate, with prices jumping to a record 12.6 percent in 2007, state-run newspapers quoted a government official as saying.

Phuc told a cabinet meeting on Sunday that exports this year would rise to $48.3 billion and foreign direct investment would soar nearly 70 percent from 2006 to $20.3 billion.

Inflation stood at only 4.5 percent in 1996 when the economy of the southeast Asian country expanded 9.34 percent. Prices last rose beyond the 10 percent mark three years ago, reaching 10.3 percent in October 2004 from a year earlier.

The Vietnamese government had previously targeted 2007 GDP growth at 8.5 percent and inflation below the growth rate.

Last month, Vietnam raised the 92-octane petrol retail prices by 15 percent to 80.5 U.S. cents per litre, while diesel prices firmed 18.6 percent to 63 U.S. cents per litre, as Hanoi moved to help cut losses by state-run importers when global oil prices surged.

At the cabinet meeting, Industry and Trade Minister Vu Huy Hoang forecast prices next month would firm 1.8 percent from this month, driven by consumer’s demand ahead of the Lunar New Year festival, Vietnam’s largest, which comes in early February, 2008.

The government is expected to release full GDP details and trade statistics later this month. (Reporting by Ho Binh Minh; Editing by Valerie Lee)